Eyeing a New Bank or Credit Union? Here's How to Make the Switch

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Jul. 9 2021, Published 11:53 a.m. ET

As you become more financially literate, you might be inclined to break the status quo and switch banks or credit unions. Making the right choice requires a bit of research, but actually changing your accounts is a simple task.

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Here's how to switch to a new bank or credit union after you've decided not to stick with your existing one.

Do your research and find the right bank for you

Maybe you're a Wells Fargo customer upset about the recent closure of personal lines of credit, or perhaps you just decided that your old bank isn't cutting it any longer.

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Whatever the case, it's important to figure out why you don't like your existing bank so you don't repeat the same mistakes. 

If you don't like the big bank atmosphere, a local bank or credit union might be a better choice. If you don't like ATM fees, a bank that offers ATM fee rebates might be a good choice. If you want a personal line of credit at your bank, Wells Fargo is obviously out of the question.

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You can have different accounts in different places (like a brokerage account and high-yield savings account), so don't pigeonhole yourself.

Once you've decided on the new bank you want like to switch to, take the following steps.

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Open and fund your new bank account

Before you close your old account, you need to apply for and launch your new account. Make sure that it's all set up before moving forward.

The most important part of this step is funding your account with the minimum deposit. Each bank has a different minimum initial deposit requirement. In some cases, you'll also need to maintain the minimum balance requirements (although not all banks require this).

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When you sign up for a checking account, you might have the option to allow or disallow overdrafts. Decide whether you would like your debit card to decline or overdraft when funds are low. This choice isn't always available, but it's worth checking into.

Take stock of all your recurring payments associated with your old account

Do you have automatic payments and subscriptions set up with your old account? Make a full list and double-check it. Then, switch all of your payments to your new account. Visit the settings for all of these payments and change your bank and routing information to the new account you've created for yourself.

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This is mostly applicable to checking accounts, but it's also relevant for credit cards and personal lines of credit.

Check off each payment as you go and double check it all before taking the final step to close your old account.

Transfer your remaining balance and close your old account

Before closing your old account, transfer the remaining balance to your new account. Then, you can go ahead and close the old account. You will likely receive a virtual or physical letter from the bank confirming your account's closure. Cut up any cards associated with the old account and get started using your new bank.

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